Much like the global economic landscape, Canada’s economy is constantly in flux. The Gross Domestic Product (GDP) serves as a reliable indicator, providing insights and data into the economic health and prospects of the Canadian economy. 

The most recent figures indicate that GDP declined 0.1% in June, following a 0.1% decline in May. The quarterly report, released on August 29th, revealed that GDP contracted 0.4% in the second quarter of 2025. This post provides a greater understanding of Statistics Canada’s latest numbers and their implications for borrowers in the Canadian market.

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Key Takeaways

• The latest GDP numbers show the Canadian economy shrank 0.1% in June.
• In 2024, GDP grew 1.5%.
• Preliminary estimates indicate that the economy is expected to increase by 0.1% in July.

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Latest GDP Numbers in Canada

Gross domestic product (GDP) measures Canada’s economic activity based on the total value of all goods and services produced in Canada over a specific period. Dividing the total GDP by the population reveals the average economic activity each citizen contributes, referred to as GDP per capita. 

When tracked over many years, GDP can show whether Canada’s economy is growing or contracting. When GDP is on the rise, it is a sign of good economic health. Meanwhile, contracting GDP indicates that Canada is not working at full capacity or might be heading toward, or is already in, an economic recession. 

Statistics Canada reported that the Canadian economy contracted 0.1% in June, following a 0.1% decrease in May. 

Sectors that saw contractions include:

• The manufacturing sector declined 1.5% as two-fifths of manufacturers reported an impact from tariffs. 
• Durable goods declined 2.1% in June as 7 of 10 subsectors contracted. 
• Non-durable goods manufacturing industries contracted 0.7% as 5 of 9 subsectors saw declines. 
• The utilities sector fell 1.2% seeing its fourth consecutive monthly decline. 
• Transportation and warehousing fell 0.3% following growth of 0.6% in May.

Sectors that saw gains include:

• The retail trade sector rose 1.4% offsetting the 1.3% contraction from May.
• The wholesale trade sector increased 0.5%, up for the second consecutive month.
• Real estate rental and leasing grew 0.3% for the third consecutive month, reaching record highs. 
• The construction sector grew 0.3% for the third time in 4 months. 
• The mining, quarrying, oil and gas extraction sector rose 0.1% following 2 consecutive monthly declines.

GDP Second Quarter of 2025

Statistics Canada’s Q2 GDP data recorded a 0.4% decline following a 0.5% gain in Q1. This contraction was driven by significant declines in the export of goods and a decrease in business investment in machinery and equipment. 

Exports declined 7.5% after increasing 1.4% in Q1. International exports of passenger cars and light trucks fell 24.7% due to the tariffs imposed by the US. Exports of industrial machinery, equipment and parts fell 18.5% and travel services declined 11.1%.  

International imports declined 1.3% in Q2 due to the counter-tariff response by the Canadian government. Imports of passenger vehicles fell 9.2% and travel services fell 8.5%.

Canada’s Economy Shrank 0.1% in June, With an Increase Projected of 0.1% in July

June’s GDP declined 0.1%, with 11 of 20 sectors contracting this month. According to Statistics Canada’s preliminary estimate for July, GDP is expected to increase 0.1%. This advanced estimate is due to increases in real estate and rental and leasing, mining and quarrying (except oil and gas) and wholesale trade, offset by a decrease in retail trade.

Housing Investment Increases 

Residential investment, a key driver of the Canadian economy, increased 1.5% in Q2. This was driven by an increase in new construction, up 3.7% as higher work put in place and absorptions for apartments, primarily in British Columbia, fuelled growth. Ownership transfer costs rose 1.0% in Q2, recovering slightly from the significant 16.3% decline in Q1. Meanwhile, residential renovations fell 1.1%.

Real Estate Rental and Leasing vs. Home Sales

The real estate rental and leasing sector rose 0.3% for the third consecutive month in June as all subsectors saw growth. Leading growth was higher activity at the offices of real estate agents and brokers and activities related to real estate (+3.1%). Legal services increased 0.2% which gains much of its operations from real estate transactions. This third consecutive monthly increase reflects rising home resale activity across the country, particularly in the Greater Toronto Area.

Household Spending Increases 

Household spending rose 1.1% in Q2, after an increase of 0.1% in Q1. Growth in household spending was primarily driven by new trucks, vans and sport utility vehicles (+5.6%). This was followed by a 1.3% increase in insurance and financial services, and a 0.9% increase in food and beverage services. These were offset by reduced spending on electricity (-3.2%) and alcoholic beverages (-3.9%).

Frequently Asked Questions

Final Thoughts

The latest GDP numbers paint a complex picture of the Canadian economy. Future rate markets and economists are pricing in a rate hold for the September announcement. 

With the economy reacting daily to interest rates, this may be an opportune time to prepare your finances if you are looking to purchase a home or renew or refinance your mortgage. Reach out to nesto mortgage experts to understand your borrowing capacity and solidify your mortgage strategy.

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